Filing bankruptcy, at least in the United States, automatically stays (stops) most actions by creditors against the debtor or the debtor's property. For example, the stay prevents a secured creditor from foreclosing or repossessing the collateral for the loan. The stay is designed to preserve the debtor's property and to give the debtor a break from litigation. The stay is neither absolute nor permanent. A creditor can file for “relief” from the bankruptcy stay and will be allowed to seek a remedy against the debtor in spite of the stay if the creditor can show good cause to do so.
Once the bankruptcy proceeding reaches its end and the debtor is “discharged” a creditor can proceed to repossess collateral or foreclose in order to protect its interest. However, the bankruptcy cycle time can be many months. For some types of property, especially personal property such as automobiles, the depreciation of the value of the property during the bankruptcy proceeding results in additional loss to the creditor. Thus, one reason a creditor might be granted relief from the bankruptcy stay is that its interest in the collateral is not adequately protected because the collateral is depreciating due to the passage of time and the debtor's use of the collateral, while all the while the debtor is making no payments to the creditor.
Financial institutions with large numbers of outstanding loans must continuously review accounts for debtors in bankruptcy and make determinations as to whether there is enough at stake to justify the cost of filing for relief from the bankruptcy stay. This review is often a largely manual process.